To Waste or to Waist: That is the question

 

     As is true of many people growing up in the US, I was encouraged to always clean my plate (encouraged is putting it mildly -- I remember being required to still be sitting at the dining table at 3am (and even longer if "necessary") because I hadn't cleaned my plate). The general principle of not wasting food is a good one -- the dangling of "there are starving people in xxx" is NOT a good one as the reason for people starving in parts of the world is political and not economic (cleaning my plate, or not, would make no difference).

     If I took food onto my plate and then told "take what you want, eat what you take" then that would also be reasonable. I would learn to take only what I was hungry for and would eat and there would not be any immediate wastage. (Eventual wastage was/is dependent on how much was left at the end of the meal and whether there were unplanned meals where leftovers were a strong source of food.)

     Having others put food on my plate and then being required to eat it was NOT a good principle. It primarily taught me to ignore my feelings of satiation. There was no such thing as being "full" or "content" as long as there was still food left. This system of superfluous portions continues into the present day with "supersizing" and eating-out portions in general. There is always the possibility of bringing food home but, honestly, how many times does it go home to be later thrown out?

     Being able to overeat has been a source of status in many societies in the past. Actual overeating, however, has not been, and is not, healthy for anyone.

     This principle also comes true in business areas. It's always tempting to get a lot of something because you can get it for less per unit. Buy 50 for $100,  buy 100 for $150. But there are hidden costs to buying more than you currently need. Storage, logistics in general. Yes, you may save money (even allowing for hidden costs) but might that extra capital being held as storage of an item be more useful for something "now"? This is the primary driving principle for "just in time" deliveries of materials. When this is combined with primary storage working with multiple consumers then both types of savings can take place -- quantity savings for the primary storage location with "just in time" savings of space and capital for the consumers.

     As personal consumers of food, we also tend to put the surplus into storage. That storage affects our health and our waistlines. It is difficult to average out food consumption and purchasing to create an optimum "no extra, no waste" situation. It is more difficult with one person than two, more difficult for two people than for five. There is also the need to balance need versus cost. If buying four cucumbers costs only 25 cents more than buying two, then buying four is the obvious bargain, correct? But what if I said that you can only reasonably use two cucumbers before the others go bad? You end up saving 25 cents (and storage space) by NOT buying the larger quantity.

     "To waste or to waist". My childhood training taught me one set of values. My knowledge, as an adult, tells me otherwise. But that doesn't make it easy to change. It can also be difficult, in business, to pass up bargains where the real value received does not match up to the price. As always, all aspects of a transaction -- or transaction's journey -- must be considered.

     

Hunger and appetite -- the lost relationship

     "Eat your vegetables." "Clean up your plate." "Don't you know that there are starving children in XXX and YYY who would love to have that food?" It may not be quite as true for children in the United States as it was 50 years ago, but I suspect many of the same statements are heard around the table. Of course, the last question of food distribution is more of a political issue than an economic or nutritional one.

     On the positive side, I was not allowed to become a "picky" eater. If it was cold, I ate it. If it was spoiled, I ate it. If it was burned, I ate it. If I hated it, I ate it. (If I loved it, I ate it but might, or might not, have more.) I remember one time when I refused to eat something and I was required to stay at the dinner table until I cleaned my plate. As I recall, that was at about 4 in the morning. I possibly could have (and maybe not) "toughed it out" and "succeeded" in not eating it but I reached the point of realizing that I might win that battle but I would lose the ongoing struggle.

     On the negative side, there was no control over portion size or what I ate. In fact, on those rare occasions when we ate out, I was not only expected to clean my plate but my mother seemed to feel that I was there as a garbage collector to clean her plate as well ("the growing boy needs his food and we are not going to waste any"). Any relationship between hunger and eating was burned out of me.

     As a result, it is probably not a surprise that I had problems controlling my weight. My older brother was "blessed" with a more active metabolism and didn't gain weight until after his metabolism changed when he was about 30. He stayed skinny. I did not. It wasn't until I was away from home and had direct control over my eating that I succeeded (with the help of a swim class and a mile of swimming per day) in getting my weight under control.

     That success did not carry over to the basics of appetite and portion control. I still had no correlation between how much my body needed and how much I ate. So, over the years, I regained the weight. During this same period (from the 1960s on), portion sizes at restaurants started on their continual gradient  (see my "Supersizing" blog about the economics behind that trend) -- and "fast foods" became more of a daily reliance than an occasional treat.

     The relationship between need and consumption is still not encouraged by the economic system of the U.S. Consumption is increased by various methods: commercials and general media as well as additives within the food. Addition of sugar adds to the calories, reduces the nutritional balance, and takes advantage of the "swallow reflex" to cause the body to want to eat beyond any (now ignored) response of fullness. Extra salt and/or MSG is added to enhance the other flavors to make it more appetizing without the need for careful preparation or more expensive ingredients.

     It is possible to escape the cycle of eating without need (in the areas of the world where food is not in shortage) but it is "swimming up stream". First thing to do is to set portion control. I now have the mantra of "to waste or to waist" -- meaning that I may waste extra food but it is not going to add to the inches around my waist. It is still difficult for me to actually throw food away so leftovers come back to the house (adding to landfill contents and, often, still being thrown away when there is no opportunity to actually need it for a meal). And people in the U.S. (not such a problem elsewhere) expect larger portions for the prices that are paid.

     After portion control (which can be done by mathematics rather than recovering one's ability to feel full) comes a deliberate reduction (or attempted elimination) of refined sugar and carbohydrates in the diet as well as the artificial sweeteners and substitutes which are, most likely, no better for your body (and possibly a lot worse). Not eating out gives much more control but processed foods are more accessible and more economic than home-prepared foods. I can buy grated cheese for less than I can buy block cheese and grate it myself (economics of scale, packaging, and distribution). In other words, a significant change in lifestyle as well as ignoring the economic, commercial, and media pressure to do otherwise is needed. Very difficult.

     Another item which can help is to take time with meals -- both in preparation and in consumption. My wife talks about the 10 minutes that we get to spend with our sons at the dinner table before they head back off. In many countries, and societies, that is a half-hour or more. The average amount of work hours in the United States is so high that various other non-work activities are cut down. And one of the dominant areas of reduction is in meal time.

     I am still fighting (at almost 60) to regain a relationship between need and consumption -- hunger and satiation. I make some progress but it is not easy -- society has evolved to make it undesirable for it to be easy. When you reach for the next bite of food, start asking yourself (this will slow down your eating also) whether you really want it. You may be surprised at the answer.

The economics of supersizing

I have to be careful when I talk about economics as it is such an all-pervasive subject that it is easy for me to lose focus. I consider it to be "applied sociology" -- or a measured way of evaluating how people interact and value each other within society.

Once upon a time, during a telephone interview with Google, I talked with them about how I thought Google was in a fantastic position to create an interlinked database of products, employment, and salaries. As only one example, such a database, and associated tools, could be of enormous help in figuring out how to migrate from a fossil fuel economy to a renewable fuel economy while minimizing the effects on the economy and individual workers. (Later, with 35 years of software architecture, programming, and managerial experience, Google called me in to interview for a marketing position -- they definitely have a sense of humor.)

See how easy it is for me to lose focus!

In the area of focus for this blog, supersizing involves a combination of total profits and perceived value. Perceived value is a subjective matter -- it depends on the individual and their history. In the US, it is considered to be of greater value to get more food for less money per amount -- in spite of the fact that the greater amount is unneeded and ends up being waisted (misspelling intentional). In most European countries, quantity does not enter into the equation for value as much as quality. In some other countries, it is a sufficient struggle to just get enough to eat.

When a product is sold, it is sold at a specific price. This price can be determined in one of two general ways. These are basically "cost plus" or "demand pricing". With "cost plus", the price is determined by a specific amount added to the cost of producing the item (including all overhead such as building costs, utility costs, storage, labor, and inventory loss). So, if a thingamabob costs $1 to make, store, sell, and so forth and the company wants to make 20% profit on selling thingamabobs, the price will be set at $1.20. With "demand pricing", the price is set to the highest amount that will lead to the greatest total profit. This is a bit more complicated.

"Net profit" is the difference between all the costs associated with making and selling something and the amount for which it is sold. In the "cost plus" example, there is a net profit of $0.20 or 16 2/3% (20 divided by 120). In "demand pricing", net profit is determined in a similar fashion except that the goal is to maximize the total profit.

In order to maximize total profit, the goal is sell the MOST possible at a specific net profit such that the total amount is the greatest. For example, selling 1000 of something that has a net profit of $0.20 will give a total profit of $200. Selling 500 of something that has a net profit of $0.50 will give a total profit of $250. So, even though you are selling less, you end up with a greater amount of total profit. But, if you get especially greedy and start selling something a a net profit of $1 and only sell 100, you will end up with only $100 profit.

The practice of pricing for "demand pricing" is an art and involves marketing (convincing you it is something you want), branding (letting you recognize the product and make positive associations that increases its perceived value),  and competition.

If you have a product that is desired by people and you are the only one who makes the product then you can demand the greatest amount. If you have a product that is made by many different companies and there is little perceived difference of value, then you enter what is called "commodity pricing" which usually has small net profits per item and requires mass production and sales to be profitable.

So, we come down to the area of supersizing (finally, you say). Supersizing (in the US) does two things -- it increases the perceived value and it increases the net profit (it MAY also increase total sales because of the increase in perceived value ). Let's say that you sell a tidbit that has $0.50 costs associated with what goes into it (raw, or pre-processed, food ingredients), $0.30 labor, $0.50 overhead (such as building, heating, lighting, franchise fees, etc.), and $0.30 for sales (marketing, "free" toys, posters, advertising, etc.). You then sell the tidbit for $2, giving a net profit of $0.40/item (or 20%).

If you can convert that sale into buying something bigger -- let's say twice as big. then the only thing that you have increased is the costs of what goes into it. [There is, admittedly, a little more overhead concerning storage of more stuff but that is often balanced with a reduction in cost of buying raw materials.] So, rather than $0.50 of stuff going into it, there is $1 associated with the costs. You then sell the item for $3 and you make a net profit of $0.90/item (or 30%). If you make it three times as large and sell it for $4, you would make a net profit of $1.40/item (or 35%). This is how supersizing translates into FAT profits (OK, I admit it, I like puns).

In summary, as long as people see greater value in buying more food for less per amount, it will be difficult to persuade companies to not supersize as this is an easy way for them to achieve greater profits. The only route is to change mindset to demand greater quality rather than greater quantity.